London Bank Failures

Big Bank Failure Could Turn Credit Crunch Into Global Crash

The seizing up of the world credit markets—triggered by the collapse of the household debt bubble in the United States—may turn from a slow-motion collapse into a thorough crash, if one or more major investment banks fails in the near future.

Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen 32% after it had to ask the Bank of England for emergency funding. But experts and officials insist that Northern Rock, which has £113bn in assets, is not in danger of going bust. Despite the reassurances lines of customers formed outside many Northern Rock branches around the UK. The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer...

(charts at link)Both the UCLA Anderson Forecast (1mil) and Goldman Sachs (1.1mil) have recently revised down their estimates for housing starts for the next couple of years... My forecast is for starts to fall to about 1.1 million units... 1)If these forecasts are accurate, starts have fallen less than 60% from the recent peak annual rate in 2005 (2.07 million units) to the eventual bottom. We are barely more than half way, in terms of starts, from the peak to the trough! 2)Demographics are NOT currently favorable for housing as compared to the late '60 through early '80s...

This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”. Arizona, Florida, California, and Virginia have seen precipitous drops in sales.

The Commerce Department also reported that “the number of vacant homes increased by 34% in 2006 to 2.1 million at the end of the year, nearly double the long-term vacancy rate.” (Marketwatch)

“The US economy is in danger of a recession that will prove unusually long and severe. By any measure it is in far worse shape than in 2001-02 and the unraveling of the housing bubble is clearly at hand. It seems that the continuous buoyancy of the financial markets is again deluding many people about the gravity of the economic situation.”Dr. Kurt Richebacher[more]

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Where is the US heading? Are there examples where an out of control government aligned with organized crime will go? Videos in [this post] may show where the US is headed.